Posted
by
timothyon Friday May 30, 2014 @07:28PM
from the market-pricing dept.

miller60 (554835) writes "Citing strong demand from cryptocurrency miners, data center and colocation providers are beginning to accept Bitcoin as payment for large chunks of data center space. It's a sign that the data center industry sees an emerging opportunity in catering to the hosting needs of crypto miners, who typically seek high-density space with cheap power. While many web hosting companies accept Bitcoin, larger data center players have been slower to embrace cryptocurrency. Utah-based C7 Data Centers says it's accepting Bitcoin because of surging demand. The Utah-based company says it now hosts about 4.5 megawatts of mining gear, just down the road from the NSA data center." On-topic: Dish Networks has recently become the biggest company to accept Bitcoins.

Besides, the real money without detection would be to steal idle wallets. There's a huge amount tied up in people who dabbled a bit in the early days, mined a coin or two (back when you could do so easily) and then lost interest.

The blockchain is nothing more than a transaction record. It doesn't "enable" anything.

Bitcoin (and all blockchain tech) solves the Byzantine Generals Problem [wikipedia.org] which is a classic problem of computer science. It means you can create distributed exchanges of virtual or real property in the face of people trying to lie, cheat, or steal. Its actually a pretty big achievement. There are distributed market places, distributed exchanges and other interesting developments in the works all based on the fact that we can now build software on top of blockchains. But please continue to tell us how Bit

I no longer have to worry about paying my bills and putting food on the table thanks to bitcoin.

The existence of the Zionist Federal Reserve is to enslave people through debt. The only way to revitalize the economy and to free the people is to invalidate the U.S. dollar's legal tender status. That way all debt denominated in U.S. dollars will be invalid, unleashing enormous economic growth that were suppressed due to debt. This is the central thought of the New Monetary Theory.

Monopoly money can be print a zillion time, making it a bad choice. Bitcoin is limited and controlled... that's why it can be used as a currency.
Before saying anything stupid, read how the blockchain, proof or works and distributed decentralized consensus works in Bitcoin and you will understand why it's a great invention.

If it is profitable to pay for computer capacity for mining bitcoins, why aren't the datacenters doing it themselves (especially since they'll have spare capacity anyway)? I mean, the miners want to make a profit. So, if they can make a profit by paying for the data center equipment, the data centers would make (more) profit doing it themselves.

Because there are only 3600 bitcoins per day no matter how many PCs you throw at it. If Amazon started using all their power to mine them, they might get them all, but the price wouldn't rise to accommodate and they would be spending millions to make thousands.

Bitcoin mining is a careful balance between getting enough power to make a profit and not losing money by overspending based on the difficulty. Most bitcoin miners lose money and only make it up by holding the coins until they are worth more. This

Because there are only 3600 bitcoins per day no matter how many PCs you throw at it.

You mean there's a target of 3600 bitcoins per day, with adjustment of difficulty every 2016 blocks.

If Amazon started using all their power to mine them, and switched it on right after a difficulty adjustment,
50400 bitcoins might be mined in fewer than 2 weeks, for example, they might mine 8000 bitcoins a day, for 7 days.

Also, if their mining power exceeded 50%, of the Bitcoin network: they might be able to ch

Also, if their mining power exceeded 50%, of the Bitcoin network: they might be able to cheat.

The fastest current supercomputer, according to Wikipedia [wikipedia.org], has a bit over 55 petaFLOPS. The Bitcoin network, on the other hand, has around 980,000 petaFLOPS, accordgint to Bitcoin charts. So that's a pretty big "if".

has a bit over 55 petaFLOPS. The Bitcoin network, on the other hand, has around 980,000 petaFLOPS, accordgint to Bitcoin charts. So that's a pretty big "if".

It doesn't matter how many FLOPS the biggest supercomputer has.
If Amazon seriously decided to get into mining, it would be by manufacturing or buying from manufacturers
extremely large volumes of silicon containing specialized ASICs, ULAs, or structured ASICs; yes it would require more infrastructure and massive logistics to online the suitable inf

It is easier to make a business plan around charging predictable rates for a service, than participating in a game of mathematics where the value of your yield is market driven.

You may argue stock funds here, but they have fund fees which typically decrease if you let them play with your money longer.

These people are not going to spend money on coin mining if it potentially may harm their main business. What happens when China and Russia outlaw it and the bottom drops out? Lots of expensive equipment to wri

During every gold rush throughout history, there is always one group of people who are guaranteed to make money, regardless of the actual gold supply, and that is the merchants selling the equipment to the miners.

Investors love predictable price action, ideally upwards. With bitcoin, you may lose everything you invest, or may make a thousand percent in a month. It's all over the place. It seems to be slowly going down right now, but any news could cause that to change.

Bitcoin mining is for suckers. It barely covers the cost of electricity. Plowing through large swaths of finite numbers, chugging along 24/7 puzzling away, is the stupidest excuse imaginable for damaging the environment. Can we just move to a system where you freeze a block of dry ice, launch it into space, and get a newly minted Bitcoin?

Chugging along 24/7 puzzling away, is the stupidest excuse imaginable for damaging the environment.

No... humans damage the environment already. Anything that increases energy demand ultimately helps the environment by raising energy prices and creating incentives for the development of more efficient ways of supplying power.

Bitcoin mining actually is doing useful work -- it is also a small-scale activity helps create an economic incentive for people to look for new, more ample sources of energy, such

No... humans damage the environment already. Anything that increases energy demand ultimately helps the environment by raising energy prices and creating incentives for the development of more efficient ways of supplying power.

Is this something that you actually believe, or are you making a joke? It's a little hard to tell. I'll contribute: Patent trolls are good because they create incentive for patent reform. Littering is good because it creates incentive for companies to release products with reduced packaging. Copyrights that never expire are good because they create incentive for people to live longer. Air pollution is good because it creates incentive for people to find alternatives to breathing so damn much.

Littering is good because it creates incentive for companies to release products with reduced packaging.

How does that work?

Patent trolls are good because they create incentive for patent reform.

Yes, but only if the patent trolls are highly disruptive and cause shutdowns / outages for products that congressmen, judges, and the average joe rely on, in order to spark protest and government response against the general problem.

Bitcoin mining does a few interesting things... it creates a "shock" for data

sooo... You are predicting that bitcoin will disappear in August 2016? The reward simply halves and halves, and eventually it's the transaction fees which will cover the expense of mining.

No, but the mining incentive will go down by 50%. This will most likely bleed most miners out of the market altogether. The transaction fees are miniscule, and they won't support much mining in the long run.

At this point 1BTC is probably 50k +

How or by what mechanism do you propose 1 BTC approaches 10k+, let alone

Have you considered just how much energy half a million bank branches worldwide consume? Some of those bank buildings are the largest skyscrapers in the world. For a valid comparison, you need to look at total energy consumed per dollar/bitcoin transaction.

Why is this so hard for everyone to understand? Why is the idea of wanting to unplug our computers before bedtime so alien to everybody? Running a computer all day to mine a Bitcoin yields nothing to the world except a big finite number and some CO2.

Money is needed as a way for people to handle the flow of resources, not just for handling more money. Dollars can also be handled electronically. They do not consume natural resources when printed except for the piece of paper. A dollar doesn't derive its value

Why is the idea of wanting to unplug our computers before bedtime so alien to everybody?

Nobody's stopping you from unplugging your computer, or are they? But this isn't about "we" can do. It's about other people doing things you don't like them to do, such as leaving their computers running performing work you deem unworthy.

Money is needed as a way for people to handle the flow of resources, not just for handling more money. Dollars can also be handled electronically. They do not consume natural resources

Nobody's stopping you from unplugging your computer, or are they? But this isn't about "we" can do. It's about other people doing things you don't like them to do, such as leaving their computers running performing work you deem unworthy.

I'm so glad that you know what 97% of climate scientists think about bitcoin. Nice way to not actually argue on points, though, like showing that the CO2 generated by mining over the life of the bitcoin protocol will exceed the CO2 which might be saved?

OK, I think you see the point, that wasting electricity is one reason why the life of the bitcoin protocol should be kept as short as possible. A better-designed protocol might not need this phase of heavy computation at all. Instead of paying money to an electric company, you might do something else with it to get new "coins". The challenge there would be getting around the need for a certifying authority.

You're still not arguing against the points raised by DanielRavenNest and ultranova. Neither of them claimed that the bitcoin protocol was the "best-designed" protocol from an energy efficiency point of view.

If you're really interested in solving the problem which seems to irk you so, just go out and make Peercoin (or whatever other alternative cryptocurrency you invent which doesn't require proof-of-work in the long term for maintaining the block chain) more popular than Bitcoin. You could start by talking

You are assuming that bitcoin mining will exponentially keep increasing and no new efficiencies discovered. Wrong.Bitcoin mining is auto balancing by the value of each bitcoin. If energy spent costs more than bitcoin acquired, people will not invest in new mining hardware. How could they, or is money somehow infinite for the miners, to be able to purchase more and more gear?

FIAT money is not energy free neither.Bitcoin is revolutionizing how money is conceived, FIAT money is basicly a huge scam, there actua

In this we agree. Cryptocoin mining, no matter which coin you mine, is not profitable for anyone except really large players. Coin difficulties increase with overall network hashing rates, so any hashing power you have is effectively reduced every time the difficulty rises. This is something that people don't take into consideration when they go and buy those big ASIC rigs for $10,000 thinking that they're reach break even in a month. Honestly, if the machines were that profitable then the companies making

Honestly, if the machines were that profitable then the companies making them would just keep them and mine on their own, as it would be more profitable than just selling the hardware.

This actually isn't totally true, since cryptocurrencies rely on several kinds of trust, and one of them requires that no single entity controls the mining. So it can sometimes be in the interest of a mining equipment manufacturer to even sell mining equipment at a loss, if the manufacturer also mines.

so close to zero we may as well say zero. But all IT tech together is using a measureable chunk of fossil fuel. All IT together is about ten percent of electrical consumption, and fossil fuel is used in two-thirds of all electricity production, and forty percent of fossil fuel use is for electricity. So 0.03 percent of fossil fuel use is used by IT tech.

so close to zero we may as well say zero. But all IT tech together is using a measureable chunk of fossil fuel. All IT together is about ten percent of electrical consumption, and fossil fuel is used in two-thirds of all electricity production, and forty percent of fossil fuel use is for electricity. So 0.03 percent of fossil fuel use is used by IT tech.

Fossil fuels are used in ALL forms of electrical production. The difference is simply how direct the use is. Current Solar Cell technology for example, puts horrible amounts of CO2 into the atmosphere because of the processes used to mine and make the glass and silver in them. (Silver mining is terrible for the environment) It's still not as bad as coal (nothing is as bad as coal) but it's still bad.

No one seems to mention that they accept bitcoin like they accept VISA cards. All of these places actually want dollars. Any bitcoins they accept through a payment provider are instantly converted to dollars by that provider and that is what they really want. In that scenario, it is failing to pick up as a currency, but is gaining some ground as a money transfer device. The downside is that now instead of just the third party payment provider, there is a third party payment provider plus the bitcoin network.

It seems to me that this is only maintainable while new coins are being mined. Once the mining approaches 0, people will start wanting a transaction fee to process the networks transactions. At that point it can't possibly be cheaper than the traditional payment processing networks. I don't believe in bitcoin as the lasting cryptocurrency. Unfortunately (or fortunately), as bitcoin is the dominant one, if it falters and fails, it will be a long time before anyone would trust another cryptocurrency even if the bugs are worked out.

Well, I very well may be completely off base, but my theory is that you have two situations. Situation #1 has just a third party payment processor. Situation #2 has a 3rd party payment processor like bitpay + a non-zero fee from the bitcoin network.

Of course, my assumption is that all 3rd party payment processors are approximately equal and that may prove to be totally unfounded with bitcoin processors.

The point behind getting a currency started is making it available, easy to tender in, and widely accepted.

When someone that has NO interest in bitcoin, finds out that EVERY supplier you have (think you local grocers, coffee shops, clothing stores, etc) accepts it, (even if they only accept it through payment processors) you're likely to be willing to accept it when it's offered to you.

Now, when suppliers of goods and services start getting more and more % of their customers paying in BTC, they're more a

I question your assumption. Third party payment processors for $ have costs not associated with Bitcoin and something of a lock-in due to network effects (Don't take Visa? You just cut out 80% or more of your potential customers. Take Bitcoin? Use any one of an increasing number of processors).

Of course, hopefully the processors will fade with time anyway as suggested below by the AC.

Mining fees will be kept low by intense competition amongst miners. This is also an incentive for merchants to accept and us

Costs will increase because you have to do all of the same work as a traditional payment processing network plus you have one additional currency exchange. The supply curve will hist upward to try to capture more of the surplus to compensate.

Well, you actually don't have to do all the work of a traditional payment processing network and there is much more room for competition, driving prices down. The current players are already much cheaper than the alternatives. Mining fees will be kept low due to, again, competition. Raise the fees you require to process a transaction and someone else will process that block instead. The protocol is very well designed in this regard (IMO).

That's because their supply chain doesn't yet accept bitcoins. For a data center, I imagine their main costs are IT hardware, electricity, and staff. Once those also accept bitcoin, they don't need to use a payment processor to convert, just send the coins along to the next person.

There's a natural progression from hobbyists paying for pizza, to small online retailers taking it for socks, to larger retailers, now to satellite TV. Eventually second level sup

be a replacement for the US dollar....or any other fiat system...we'd have to legislatively change our entire economic system and get the world to co-operate.

GP was right, All of these places actually want dollars

That's because their supply chain doesn't yet accept bitcoins....There's a natural progression from hobbyists paying for pizza, to small online retailers taking it for socks, to larger retailers, now to satellite TV. Eventually second level suppliers will start taking it, and you begin to get a com